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Forester Company has five products in its inventory. Information about the December 31, 2021, inventory...

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Accounting

Forester Company has five products in its inventory. Information about the December 31, 2021, inventory follows.

Product Quantity Unit Cost Unit Replacement Cost Unit Selling Price
A 900 $ 25 $ 27 $ 31
B 900 30 26 33
C 500 18 17 23
D 700 22 19 21
E 500 29 27 28

The cost to sell for each product consists of a 10 percent sales commission. The normal profit for each product is 35 percent of the selling price. Required: 1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or market (LCM) rule is applied to individual products. 2. Determine the carrying value of inventory at December 31, 2021, assuming the LCM rule is applied to the entire inventory. 3. Assuming inventory write-downs are common for Forester, record any necessary year-end adjusting entry based on the amount calculated in requirement 2.

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